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On Wednesday, Telsey analysts raised the price target for Dollar Tree stock (NASDAQ: DLTR) to $100 from $95, maintaining a Market Perform rating. The decision follows Dollar Tree’s progress in its ongoing transformation efforts, despite continued earnings volatility. With a current market capitalization of $18.82 billion and trading at $88.57, InvestingPro analysis suggests the stock is currently undervalued, while eight analysts have recently revised their earnings estimates upward.
In the first quarter of 2025, Dollar Tree reported adjusted earnings per share of $1.26, surpassing Telsey’s estimate of $1.22 and the FactSet consensus of $1.21. The company achieved a comparable sales increase of 5.4%, outperforming both Telsey’s forecast of 4.0% and the FactSet estimate of 3.9%. Dollar Tree’s operating margin also improved to 8.4%, slightly ahead of expectations. Trading at a P/E ratio of 18.39 with annual revenue of $17.58 billion, the company has demonstrated strong momentum with a 31% price return over the past six months. Get deeper insights into Dollar Tree’s valuation metrics and growth potential with InvestingPro.
The positive performance was driven by a 6.4% increase in consumables sales, which account for 50.4% of total sales, and a 4.6% rise in discretionary sales. Dollar Tree also saw a 2.5% increase in customer traffic and a 2.8% rise in average transaction value. The company continues to focus on value, with an average unit retail price of approximately $1.35 and 85% of items priced under $2.
Dollar Tree’s multi-price 3.0 store format, now implemented in about 3,500 stores, has contributed to the positive trends. The format is expected to be in half of all stores by the end of 2025. The number of customers visiting Dollar Tree stores three or more times a month rose by 9%, reflecting high customer loyalty. Additionally, the company added approximately 2.6 million new customers in the first quarter, many from upper-income households.
In other recent news, Dollar Tree Inc . (NASDAQ:DLTR) reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $1.26 compared to the forecasted $1.21. Despite this positive earnings surprise, the company’s revenue of $4.6 billion fell short of the $4.72 billion projections, representing an 11.3% increase year-over-year. The company also noted a 5.4% growth in comparable store sales, reflecting strong consumer demand. Dollar Tree plans to convert half of its stores to the MultiPrice 3.0 format by the end of the year, which is part of its strategic initiatives to enhance performance. Additionally, the company has received U.S. regulatory approval for the sale of Family Dollar and expects the transaction to close in early summer. Dollar Tree’s updated full-year guidance projects net sales between $18.5 billion and $19.1 billion, with comparable store sales growth anticipated at 3-5%. However, the company expects a challenging second quarter, with EPS forecasted to decline by 45-50% year-over-year. The company remains optimistic about cost recovery in the latter half of the year, as stated by CEO Mike Creedon.
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